NEM Spikes As Coincheck Says Sorry For ‘Losing’ $400 Million, Promises To Give It Back Later

On Friday, the crypto crowd was rattled by what certainly looked like one of the largest thefts in the history digital currencies.

Long story short (and really, you only need the short version), some $400 million worth of “NEM coins” went missing from one of Japan’s biggest cryptocurrency exchanges. That was just the latest reminder of the inherent dangers of the market.

Well apparently, Coincheck is going to reimburse everyone out of company funds although they’re not sure when just yet.

Specifically, all 260,000 people who lost money in NEM token heist (and yes, that’s just as absurd as it sounds) will receive 88.549 yen for each token they held. Here’s the translated statement from Coincheck:

Total amount: 523 million XEM

Number of holders: approximately 260,000
Compensation method: We will refund to NEM’s holders in coins check wallet in Japanese yen.

Calculation method: We will calculate the price using the weighted average of the volume, with reference to the virtual currency exchange Zaif’s XEM / JPY (NEM / JPY) operated by Tek Bureau Inc.The calculation period is the weighted average price from NEM’s suspension of trading at Coincheck to this release, and will be refunded in JPY.

Compensation time etc.: Regarding the method of procedure, it is currently under consideration.

In addition, we will carry out repayment funds from our own funds. Along with the recent illegal remittance, we apologize for any inconveniences caused by customers, business partners and related parties, such as suspension of some services. We are committed to restarting services including investigation of causes and strengthening of security system and will continue our business in the future as well as ongoing efforts to apply for registration of virtual currency exchange companies to the Financial Services Agency.

Thank you.

I sincerely hope this goes without saying, but that is laughably insufficient when it comes to explaining a $400 million theft.

Let that sink in. These motherfuckers had $400 million stolen from them and then the next day, turned around and said “we’re going to give your money back although we’re not sure when, sorry for any inconvenience, thank you.”

But you know, that’s good enough for the crypto crowd because it’s all up – especially NEM. Have a look at this nonsense:

It’s interesting that they’ve chosen to reimburse people in yen rather than in NEM tokens. If the folks running the exchange truly believe that what they’re selling is a legitimate currency, rather than simply being a speculative “asset”, why not pay people back in the currency that was stolen?

This seems like a tacit admission on behalf of the exchange that NEM tokens really aren’t a currency and that yen are a better way to reimburse these folks for their loss. It’s also telling that the customers that lost their tokens are happy to accept yen and aren’t clamoring for tokens rather than yen. It’s seems that, on some level, everyone involved knows these tokens are bullshit.

Clearly they can’t pay back in NEM when you have 20%+ daily realized volatility. What if NEM goes from 1 to 2$ in the next month? If anything, this shows they believe in the continued increase of NEM. It’d be much cheaper to pay back NEM after it crashes. Then again, if all the cryptos crash before they pay everyone back, they can just declare bankruptcy.

So, I guess, if you have to lose $400M, might as well play it like this.

Writing about a subject is the best
way to educate yourself about it, and when I flick through past work I remember how much
they taught me, if no one else. Mainly they taught me that I didn’t know very much. But they
also taught me that most other people didn’t know much either. Thus, some key themes
which stand out include the illusory control of policy makers, the presumed knowledge of
those looking to them to actively do good, the ease with which we fool ourselves, and how
best to protect capital in the face of such unavoidable uncertainty. -- Dylan Grice